Oil futures hit multi-month highs Friday over concerns that escalating tensions in Iraq will spiral into civil war. The White House signaled that it would consider airstrikes to stop Sunni militants from seizing Iraq's oil fields and other major Iraqi cities. Sunni fighters took control of Mosul, Iraq’s second-largest city, earlier this week and may pose a threat to Baghdad. Iraq produces about 3.5 million barrels of oil per day, making it the eighth-largest oil producer in the world.
Dan Dicker, author of Oil's Endless Bid, says long-term concerns over Iraq's oil producing capabilities and instability are pushing prices to ten-month highs.
"We've waited quite a long time for Iraq to get to this production level," he says in the video above. "The demand profile continues to increase and there's no question that prices will rise in the long term."
Dicker predicts oil will hit $130 a barrel by 2015. The fighting and turmoil in Iraq will also cause U.S. gasoline prices to jump, just as the nation enters peak driving season. The average price of gasoline is $3.64 a gallon, according to GasBuddy.com.
Dicker notes that demand for oil has picked up in Africa, Brazil, India and other emerging countries as demand drops off in the West. Oil-producing nations have been under pressure to deliver more crude to the market. Chaos in Libya has forced production to decrease by 10% and Syria's civil war has severely curtailed its producing ability. Analysts were hoping that Iraq's oil output would rise to 6 million barrels per day from current levels.
West Texas Intermediate was up 0.2% to $106.76 a barrel in recent trading.
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